What is agreed value coverage?

Coverage based on predetermined vehicle value, important for custom or vintage vehicles.

Agreed value coverage is a type of insurance that allows the policyholder and the insurer to agree on the value of a vehicle at the start of the policy. This agreed value will be the amount paid out in the event of a total loss, rather than the depreciated market value. This is particularly important for custom, modified, or vintage vehicles, which might have a market value that doesn't reflect their true worth due to modifications, rarity, or sentimental value. Under agreed value coverage, you have the peace of mind knowing that you will receive a predetermined amount, regardless of how the market fluctuates over time, making it a reliable choice for vehicles with unique valuation needs.

Imagine you own a classic 1965 Ford Mustang, a vehicle that you have restored and customized over the years. The standard market valuation might not adequately account for all the work and investment you've put into this vehicle. By opting for agreed value coverage, you and your insurer agree on a value, say $50,000, taking into consideration your Mustang's condition, rarity, and the modifications you've made. If the vehicle is totaled or stolen, you'll receive this agreed amount, ensuring you don’t lose out financially because of inadequate coverage.

If you own a custom or vintage vehicle, consider opting for agreed value coverage to protect your investment. Start by accurately documenting all modifications and restorations with receipts and photographs, and work with an experienced appraiser if needed. Discuss the agreed value thoroughly with your insurer to ensure it truly reflects the vehicle's worth. Regularly review this coverage to update the agreed value as your vehicle may appreciate or you might make further modifications.